Opportunities for builders' merchants in Medway

Published:  06 August, 2018

What are the reasons behind the construction boom in Medway, and what does this mean for builders’ merchants? Ian Bond, Development Manager at Space Business Centres, explains.

With the first four months of 2018 showing builders' merchant’s sales up 2.5% from the previous year, despite concerns around Brexit, sector specialists are cautiously optimistic. For those seeking to identify reliable business opportunities, Office of National Statistics data suggests reasons for positivity in Medway.

This analysis shows the area and neighbouring towns demonstrating strong construction industry growth and business survival rates, among other indications of economic health.

Medway construction industry performance

ONS data reveals Medway supports the highest total of construction businesses in the South East. Between 2015 and 2017, construction as a percentage of businesses in Medway increased by 8% to encompass roughly 20%. Constituting around a fifth of all business in the area, this is significantly higher than in the South East (13%) and the UK as a whole (12%).

Further analysis shows a 27% increase in micro sized construction businesses across the shared Local Enterprise Partnership – comprised of East Sussex, Essex, Kent, Medway, Southend and Thurrock – between 2013 and 2017. This growth of small enterprises accounted for over 99% of total construction growth in the LEP during this timeframe.

Explaining the construction boom in Medway

Targeted growth

Local government plans are targeted towards projected growth of 278,000 people and 21,500 jobs by year 2028, twice as fast as the national average. ONS data supports Medway's drawing power, with the local knowledge economy growing at twice the national rate, and small-to-medium enterprises making up the vast majority of companies.

Convenient connectivity to South East and London markets, with High Speed One and Channel Tunnel links to major and international businesses, may offer some explanation for Medway's attractiveness.

Infrastructure and investment

As a result of government plans to accommodate Medway's growing economy, the area has benefited from significant investment in growth and construction projects over the past decade.

Medway Council's development strategy details the investment of approximately £1 billion into local infrastructure over a 20-year period. A further £80 million of investment in commercial property developments, transport & broadband infrastructure, business support and reskilling the workforce is to be allocated through the Kent and Medway Growth Deal. Plans also entail the building of 178,600 housing units to accommodate population growth up to year 2031.

With the Council's latest Local Plan covering the period up to 2035, Medway can expect more major developments to the town centre and transport networks, on top of previously completed redevelopments of major waterfront areas overlooking the River Medway.

Business survival

Statistics from 2016 showed strong business growth in Medway, third-best performer in the South East for new company registrations. In 2017, the number of active businesses grew by 5.6% from the previous year's strong performance, exceeding the increases seen in the South East (3%) and England (4.8%). While third and fourth-year business survival rates during 2011-15 were unspectacular, performance stayed within a few percentage points of the UK average.

Clear potential for merchants in Medway and the South East

Kent, Medway and East Sussex now account for around 30% of all construction employment in the South East. With a vast proportion made up of self-employed operators, the opportunity for builders' merchants is already clear.

Targeted infrastructure growth in Kent and Medway - accommodating an additional 396,300 people, 178,600 homes and 170,300 jobs by 2031 – further supports the strength of the region and the future opportunities available.

Some predictions suggest the demand for construction labour may peak in 2018, but new homes, commercial buildings and infrastructure projects are set to continue long into the future. Medway Council appears poised to capitalise on the region's vast potential. Builders' merchants, too, may benefit from getting in on the ground floor of a region with high inward investment, business expansion, and numerous positive health indicators in ONS data.

Analysis by Space Business Centres

Space Business Centres created this report as part of an analysis into economic and market health. Space Business Centres provide secure and affordable office space, rental workshops, warehousing and storage in the Medway area and across the United Kingdom.

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